A Guide to the Proper Use of Economic Sanctions

April 4 (Bloomberg) -- Look at the nonstop carnage in Syria
and the ongoing nuclear project in Iran and you would be
forgiven for not putting much faith in the use of sanctions as
an instrument of foreign policy.

But look at Mali and you might arrive at a different
conclusion: Sanctions can work, and under the right
circumstances, not just in a drought-stricken, turmoil-riven
corner of Africa.

Mali is one of the world’s poorest countries. It’s
landlocked, relatively small, largely dependent on gold exports
and part of a currency union that has a common central bank in
neighboring Senegal. But it has also been a trailblazer for
democracy in a region of dictatorships, enjoying peaceful
transfers of power through elections for more than 20 years. The
junta that removed President Amadou Toure in a coup on March 22,
just a month before the next elections, is already under
pressure -- the rebellion that the junior officers said they
seized power to crush is instead expanding. Rebels seized the
city of Timbuktu last weekend.

These factors all make Mali a good candidate for sanctions,
according to Gary Clyde Hufbauer of the Peterson Institute for
International Economics in Washington. Hufbauer led a team that
produced the closest thing we have to a definitive study of
sanctions and their effects, documenting 170 cases since 1914.

The Economic Community of West African States, generally
known as Ecowas, responded quickly to the coup. Last week it
threatened to impose a package of potentially crippling
sanctions that would seal Mali’s borders and cut it off from its
accounts at the central bank, among other penalties, if the coup
leaders didn’t step aside within 72 hours. And on Monday,
despite a pledge by the coup’s leader to reinstate the
constitution and hold elections, Ecowas put the sanctions into
force, too fast for the regime to prepare and cushion itself
from them. So far, the indications are that the pressure is
working.

Sanctions have succeeded about 30 percent of the time,
according to the Peterson Institute study, and Mali should have
better odds than that. Rapid responses from the country’s West
African neighbors, as well as the African Union and France,
reflect clear recognition of the outsize political importance
Mali’s democracy has in the region. The sanctions should remain
in force until constitutional order is restored and elections
take place.

What about the more controversial cases of Iran and Syria?
Iran has been under U.S. sanctions for decades. The first round,
which lasted from 1979 to 1981, aimed to secure the release of
U.S. Embassy hostages. The sanctions cost Iran 3.8 percent of
its gross domestic product and are marked in the Peterson study
as a success, scoring 12 points out of a maximum 16 (the
hostages were eventually released). The U.S. then imposed a
second round of sanctions in 1984, hoping to deter Iran from
supporting terrorism and pursuing nuclear weapons. These cost
Iran just 0.4 percent of its GDP, according to the study, and
have failed abysmally.

Iran is large, has a strong regime, is supported by
powerful international allies and has had plenty of time to
prepare for the latest rounds of sanctions imposed by the U.S.
and the European Union. It is, in many ways, the anti-Mali; the
odds of success therefore remain poor. The same goes for Syria,
where the regime and the Alawite minority it represents are
fighting for survival. If President Bashar al-Assad is willing
to kill and torture thousands of his own people, he’s unlikely
to step down just because of sanctions.

Yet it is too simplistic to stop there. In Syria, sanctions
aren’t operating on their own: The most important factor by far
is the country’s popular uprising and military insurgency.
During World War I, Britain imposed a blockade that cost Germany
7.1 percent of its GDP, according to the Peterson study. Alone,
this certainly wouldn’t have stopped Kaiser Wilhelm’s armies,
but as a supporting player to military action, those sanctions
can be counted as a success.

The case of Iran is more finely balanced. Toughened
sanctions are hurting the economy -- as Bloomberg News reported
last week, the Iranian rial has lost half its black market value
against the dollar. Yet in Iran, economic hardship could shore
up popular support for the regime and harden its determination
to acquire nuclear weapons.

The real purpose of the new sanctions therefore should be
different -- namely, persuading Israel not to resort to
airstrikes while other nonmilitary pressure is still being
brought to bear. Equally, sanctions could pave the way for an
eventual U.S. military intervention, which would enjoy more
international support if all other options were seen to have
been exhausted.

After a decade of failed diplomacy over Iran’s nuclear
program, the probability of success for a sanctions policy has
become less important than the poor choice of alternatives,
namely military force or acquiescence in a nuclear Iran and the
regional arms race that would follow. With options like these,
sanctions that keep Israeli planes on the ground and push the
Iranians back to nuclear negotiations with the so called P5+1
remain the best available policy.

Given that foreign policy is about calculating odds rather
than certainties -- the world’s an unruly place and diplomacy
and war don’t have great success rates either -- sanctions can
be the right pick, even when the odds look steeper than in Mali.